Nokia 2006 Annual Report Download - page 17

However, such components, such as batteries or software applications, may not be compatible with
our products and solutions and may not meet our and our customers’ quality, safety, security or
other standards. As well, certain components or layers that may be used with our products may
enable our products and solutions to be used for objectionable purposes, such as to transfer content
that might be illegal, hateful or derogatory. The use of our products and solutions with incompatible
or otherwise substandard hardware or software components, or for purposes that are inappropriate,
is largely outside of our control and could harm the Nokia brand.
In our networks business, we are developing a number of network infrastructure solutions
incorporating advanced technologies. Currently, our networks business designs and builds networks
based primarily on GSM, EDGE and 3G/WCDMA technologies. Although we believe that these are
currently the leading mobile communications technology platforms, this may not always be the case,
due to operators’ choices or regulators’ decisions. Our networks business’ sales and operating results
may be adversely affected if these technologies or subsequent new technologies on which we focus
do not achieve as broad acceptance among customers as we expect, or if we fail to adapt to
different technology platforms that emerge over time.
Currently expected benefits and synergies from forming Nokia Siemens Networks may not be
achieved to the extent or within the time period that is currently anticipated. We may also
encounter costs and difficulties in integrating our networks operations, personnel and
supporting activities and those of Siemens, which could reduce or delay the realization of
anticipated net sales, cost savings and operational benefits.
In June 2006, Nokia and Siemens AG (‘‘Siemens’’) announced plans to form Nokia Siemens Networks
that will combine Nokia’s networks business and Siemens’ carrierrelated operations for fixed and
mobile networks in a new company owned approximately 50% by each of Nokia and Siemens and
consolidated by Nokia. Nokia Siemens Networks is expected to start operations around the end of
March 2007. The completion of the transaction is subject to the satisfaction or waiver of the
conditions to the merger, including achievement of agreement between Nokia and Siemens on the
results and consequences of a Siemens compliance review, and the agreement of a number of
detailed implementation steps. For more information on Nokia Siemens Networks, see ‘‘Item 4.B
Business Overview—Nokia Siemens Networks.’’
Achieving the expected benefits and synergies of this combination will depend, in part, upon
whether the operations, personnel and supporting activities of Nokia’s networks business and those
of Siemens’ carrierrelated operations for fixed and mobile networks can be integrated in an efficient
and effective manner. The process of effectively integrating these businesses into one company will
require significant managerial and financial resources and may divert the management’s attention
from other business activities. The costs and time required to integrate these businesses into one
company could cause the interruption of, or a loss of momentum in, the activities of any one, or
several, of the operations of the constituent entities. The failure to successfully integrate these
businesses within the expected time frame could adversely affect our business, financial condition
and results of operations.
In addition to all the applicable other risks included in this ‘‘Item 3.D Risk factors’’, Nokia Siemens
Networks may also expose us to certain additional risks, including difficulties arising from operating
a significantly larger and more complex organization and adding operations to our existing
operations. Further, unexpected costs and challenges may arise whenever businesses with different
operations, management and culture are combined.
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